Cover Story
CEOCFO Current Issue
Cover Story Archives
Private Equity Review
CEOCFO Interview Index
Future Features
Analyst Interviews
Corporate
Financials
Contact
& Ordering |
This is a printer friendly page!
Luxell develops flat
panel display technologies for aerospace, defense and consumer use through its operating
divisions Luxell Research and Aktelux
Technology
Flat Panel Design
(LUX-TSX)
Luxell Technologies Inc.
2145 Meadow Pine Blvd.
Mississauga, ON L5N 6R8
Phone: 905-363-0325
John Wright
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
August 11, 2005
BIO:
John Wright
President and Chief Executive Officer
Mr. Wright has over 30 years experience in the global aerospace/defense systems community
and more than 14 years of display industry experience. Mr. Wright has held significant
technical and managerial positions with Litton Industries (now Northrop/Grumman), British
Aerospace and Smiths Industries.
Mr. Wright was previously Chief Operating Officer at
Atlantis Systems Corp (TSX: AIQ). Currently, Mr. Wright is a director of the Aerospace
Industries Association of Canada (AIAC), the chair of the Advisory Board for the National
Research Council (NRC) involved in flat panel display research, a member of the Advisory
Board to the Department of Foreign Affairs and International Trade (DFAIT) involved in
expanding small/medium sized business export potential and a past director of the Society
of Information Display (SID).
Mr. Wright holds an Electrical Engineering degree
from The University of Surrey (U.K.).
Company Profile:
Luxell Technologies Inc. is a world-class Canadian company at the forefront of the design,
development, manufacture and licensing of flat panel display systems and technologies for
defense, avionics and consumer applications. The Company’s expertise extends across a
wide range of current and emerging technologies including Organic Light-Emitting Diode
(OLED), LCD and thin film electro-luminescent displays.
With Luxell’s extensive and growing intellectual
property portfolio based upon the Company’s patented Black LayerTM display
contrast enhancement technology, Luxell is positioned at the forefront of emerging
technologies, poised to integrate its Black LayerTM technology to enable
displays that are easier to read, more cost effective to operate, consume less power, and
last longer.
CEOCFO: Mr. Wright, will
you tell us about your background with the company?
Mr. Wright: “I joined Luxell just over two years ago.
Luxell is a company that has been in existence since the mid-1980s. It is a research and
development enterprise in flat panel display technologies. We invented some interesting
technologies in the early 1990s and were attempting to bring them to marketplace. The
company had some minor business problems in the late nineties, and needed a CEO to affect
a turn around and that is why I joined the company. I have a 20 year background in flat
panel displays and another fifteen years in the defense and aerospace sector, which is one
of the Luxell marketplaces. In the last two years, I have attempted to implement that turn
around. It has been a difficult environment for the tech sector in that time period. The
company is starting to respond to some of the corrected actions we have applied and we are
looking forward to a healthy 2006 and beyond.”
CEOCFO: What has changed
at Luxell and what still needs to be done?
Mr. Wright: “What has changed is that we sat down and
did some serious heart searching and figured out in which ways the company was globally
competitive. The clever company was attempting to do a number of interesting technical
innovations, but had not done that self-analysis to find out where the discriminating
skills were. We have managed to streamline the company and focus on those things where we
really do bring an advantage to our client base. The company now exists as two essentially
independent business units. One that is focused on engineering and manufacturing high
performance flat panel displays, targeted mainly at the aerospace and defense communities
and spreads out into high-end industrial markets. That business has become healthy in the
last two year periods. We have taken a company with virtually zero backlogs in that sector
two years ago, and now have a backlog in excess of $10 million dollars. It has a potential
of probably doubling that backlog over the next twelve months. Our business has come of
age. We have established a strategic client base, which contains household names such as
Lockheed Martin, Northrup Grumman, British Aerospace, and all the large multi-nationals
that look upon Luxell as a source of very cost-effective flat panel displays. The second
business unit focuses on proprietary technology that the company invented in the 1990s,
which makes flat panel display far more readable and less power hungry when used in a
mobile environment operated by batteries such as cell phones, PDA and laptop computers.
The technology was original invented for use in aerospace applications but has tremendous
potential for consumer and commercial applications as well. The company’s business
plan in that sector addresses licensing the technologies to the large Asian flat panel
display manufacturers. The company has successfully wheeled out the technology to its
intended marketplace and has a number of potentially beta site applications where clients
are evaluating our technology. We believe the technology will mature over the next two to
three years and we will start to generate some very significant licensing revenues
certainly by 2006.”
CEOCFO: What special
needs in the industry are areas of focus for you and why do the industries need something
different from the general flat panel?
Mr. Wright: “In the defense, aerospace, and the
engineering and manufacturing business, it is all about value. Everybody can design his or
her own flat panel displays. The question is who can do it better, faster and cheaper.
Luxell has focused on being better, faster, and cheapest. It is a skill that you need to
keep sharpening. When you become complacent, you lose that competitive edge. The company
has done a good job in sharpening its skills and now it is up to us to ensure that we stay
on the crest of that wave. In the licensing business the technologies that Luxell offers,
which it offers under the trade name Black Layer, offers two major advantages to its
intended clients. One is that it makes the products more attractive to the end user; the
display becomes more readable in direct sunlight and therefore is far more useful for the
end user and anybody that has tried to read their cell phones when they are out in direct
sunlight. Secondly, you have reduced the cost of manufacture. The technology that Luxell
offers is inherently less expensive to implement than any comparative technique. To the
manufacturer, he gets a low cost product and a product that is far more attractive to his
client base. Those are the two key features that Luxell offers.”
CEOCFO: Will you tell me
why people are and should be choosing Luxell?
Mr. Wright: “In the competitive landscape in the defense
and aerospace world, we see four or five larger companies that offer essentially
equivalent products to the Luxell range. We attempt to overcome the large competitors
because we are more agile and flexible. We offer a better value solution. It is an
interesting landscape because your clients would have designed and developed these
displays themselves. The larger systems integrators have decided to outsource many of
these particular niche skills because they find that we can do them far more cost
effectively. The whole supply chain is undergoing a radical change where people are
streamlining their own operations, and deciding what they are good at, and deciding to
outsource those things that they believe they are less competitive. It is always a
business about relationships. When companies start to outsource critical components such
as flat panel displays, you need to have the highest level of confidence in your supplier
that they will do what you ask them to do on schedule, on budget, and live up to the
technical performance requirements that are inherent to the defense and aerospace sector.
You need to earn that respect in the marketplace and you need to sustain it. Once you let
a client down, you lose him as a client but you also lose your reputation, and that is
critical. The watchword for the aerospace business has to be performance and integrity and
we work hard at that.”
CEOCFO: Will you tell us
about the financial picture of the company?
Mr. Wright: “It is an interesting picture in that it is
a high tech company that has been through an extended development phase in which was
invested somewhere over $40 million to develop the technology. It is now just on the verge
of profitability, which I believe is going to be handsome and sustained over an extended
period. Patient investors will be well rewarded in the future. Operating a high tech
company with that kind of history in Canada is always a challenge. Our non-traditional
financial mechanism in the past has been equity based, using the shareholder base and we
have managed to bring the company to this maturity essentially debt free. As the company
becomes healthier, the commercial banking sector will look upon us as great potential
clients.”
CEOCFO: Once you sell
the flat panel displays, what is the follow up on that?
Mr. Wright: “The good news to the end user is, as we
become more expert in flat panel displays, we can produce products which are inherently
far more reliable than the displays we used twenty or thirty years ago. The traditional
aerospace model of selling a product over a fifteen or twenty year period, generating an
enormous revenue stream from repair and overhaul and upgrades, really does not work
anymore. Most of the products we produce, we would expect to stay in the field with very
little maintenance or repair action. Your cost model needs to reflect that. The upside of
that is that the human machine interface that exists throughout our daily lives has grown
ever more complex. Go into the average home and you are surrounded by displays whether
they are laptop computers, PDAs or cell phones. The flat panel display has become the
medium of choice to allow humans to interact with machinery. Even though the marketplace
has become more competitive, the secondary revenue stream from repair is diminished; the
flat panel display has become pervasive in our society. There is an enormous product
volume. The flat panel display industry last years was in excess of $65 billion. The
pundits predict that by the year 2010, we will exceed $100 million. We are talking about
an industry with compound annual growth certainly in the teens and over the last two or
three years that has jumped 20%. If you have a discriminating technology and you exist
within that dynamic rapidly expanding marketplace and if you price your products
correctly, there is no reason why you should not be carried along by that wave of
expansion.”
CEOCFO: What should
investors be looking for from Luxell to know that you are on the right track?
Mr. Wright: “Luxell should not be any different than any
other knowledge based company. First, they need to look at the intellectual part of the
company. By that, I do not mean only patents and trade secrets but the quality of key
management and technical people within the company. They need to look for that ring of
integrity and credibility. Beyond that, I think any high tech company needs to pass the
same test as any other manufacturing enterprise. Does it have a healthy backlog and is it
maintaining gross margins that make economic sense, does it run a streamlined management
system? High tech companies in the past have had a habit of overstuffing their front
offices; that can be an expensive and foolish habit. You need to make sure that the people
you have in that management structure are actually delivering value to money. The next
part is a sensible business plan. Just because you have good technology, you have to make
sure you have realistic expectations about that technology. It is easy to fritter away
investor’s money. Those are the key attributes. They put intellectual property in the
company, have people that understand the marketplace and price it correctly, and are the
objectives realizable when we consider the resources available. If I were looking at
Luxell, those would be the three things I would look at.”
CEOCFO: In closing, what
would you like to say to readers about the future of your industry?
Mr. Wright: “When you are in the high tech business, you
always need to think about the future because if you do not, there will not be a future.
The flat panel display is an ever changing environment. In order for Luxell to stay
successful, it needs to be ever mindful that new technologies are a virtual laboratory on
an ever increasing break. We need to stay in lock step with those new technologies. We
have seen liquid crystal displays take over the world. We see other technologies such as
Electronic Inc., now becoming more popular in the scientific and popular press. There is
an expectation we may see that technology emerge in that period. Flexible displays will
probably become commonplace in our daily lives in the next five years. Our technology will
have to fit into that mosaic.”
disclaimers
Any reproduction or further distribution of this
article without the express written consent of CEOCFOinterviews.com is prohibited.
|
